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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by the Revenue is against the order dt. 27-02-2014 of the CIT-A, Central-II, Kolkata for the A.Y 2007-08.
In this appeal, though the assessee has raised four grounds of appeal, amongst which the only effective issue is to be decided as to whether the CIT-A justified in deleting the impugned addition made by the AO by invoking the provisions of section 40(a)(ia) of the Act in the facts and circumstances of the case.
Brief facts of the case are that the assessee is a company and engaged in the transport business. The assessee filed its return of income for the A.Y under consideration declaring total income of Rs.8,89,936/-. The AO determined the total income at Rs.9,52,340/- by an order dt. 31-12-2009 passed u/s. 143(3) of the Act. Thereafter, the AO re-opened the assessment and during such proceedings the AO found that the assessee debited an amount of Rs.4,82,89,790.85 to its P & L account on account of lorry freight. On an objection raised by the AO for not deducting the TDS, the assessee claimed to have been submitted Form 15-I during the original assessment proceedings before him. But on such failure the assessee again submitting the same in the re-opening proceedings u/s. 147, the AO disallowed the claim of freight charges of Rs.4,82,89,791/- by his order dt. 01-03-2013 passed u/s.147/143(3) of the Act determining the assessed income of Rs.4,92,42,131/-.
In challenge before the CIT-A, the assessee contended that the assessee hired lorry through agents and assessee noted the name of such agents in the details of freight payable. The owner lorries are individuals and Form 15 I which were obtained from them also submitted before the CIT-A. The CIT-A forwarded the same along with Form 15-I to the AO for his comments. The CIT-A found that the AO did not make any adverse remarks in his remand report. After considering the same and by placing his reliance on the orders of ITAT Kolkata in the case of M/s. S.S Impex, M/s.Capital Transport Corporation of India and the Hon’ble High Court of Calcutta in the case of M/s. Stumm India CIT-A deleted the said addition by observing as under:-
“Similar view as taken by the IAT, Kolkata in the case of M/s. S.S Impex and M/s. Capital transport Corporation of India(supra). In the case CIT, Kolkata-XVI vs. M/s. Stumm India, ITA No. No. 127 of 2009 dated 16.08.2010 the AO had made disallowance of Rs. 41,33,710/- being the payment made to transporters. The addition so made by the AO was deleted by the CIT(A) and the ITAT. The Revenue filed an appeal before the Hon’ble Calcutta High Court. The High Court dismissed the appeal filed by the Department by holding that the learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source.
In the case of appellant company, it did not deduct the tax on payment of lorry freight for the reason that the lorry owners filed 15I for non deduction of tax. In the remand report the AO has not drawn any adverse inference about the Form 15I submitted by the appellant. The appellant has also failed to bring any material on record to prove that the agents whose names were appearing in the details of freight payable were the actual lorry owners and not the persons who filed the Form 15I. There is no dispute that the Form 15I in Form 15J were not filed, in time to the concerned CIT by the appellant but for this technical fault the provisions of section 40(a)(ia) are not applicable. The fact is that the appellant did not deduct the tax on the strength of Form 15I filed by the lorry owners. Further, in the immediately preceding year i.e A.Y 2006-07 there was exactly similar facts as in the year under appeal. In the preceding year, under the similar facts, the AO accepted the contention of the assessee company and no adverse reference was drawn for making disallowance u/s. 40(a)(ia) of the Act. Again, there is also no evidence on record that there was any contract between the appellant company and the lorry owners or the agents. In view of above facts and respectfully following the ratio laid down 2 ITA No. 795/Kol/2014 in the judicial decisions as discussed above, it is held that the AO was not justified in making the disallowance of freight charges by invoking the provisions of section 40(a)(ia) of the Act. He is directed to delete the disallowance made by him. The ground no.2 is allowed.”
Heard rival submissions and perused the material on record. Before us the ld.DR submitted that the assessee did not produce Form 15I before the AO either in original assessment proceeding or in reopening proceeding u/s.147 of the Act. The CIT-A without considering the facts of the case held that submission of Form 15 I is a technical default, on which the addition made u/s. 40(a)(ia) of the Act is not maintainable. The ld. AR submitted that all the truck owners are individuals and the assessee submitted the Form 15I before AO in the original proceedings U/Sec. 143(3) as well as before the CIT-A. The CIT-A found that the AO did not make any adverse remarks in his remand report regarding the same. Considering the submissions of assessee along with Form 15I as submitted before him deleted the said addition by placing his reliance placing his reliance on the orders/decisions of ITAT Kolkata in the case of M/s. S.S Impex, M/s.Capital Transport Corporation of India and the Hon’ble High Court of Calcutta in the case of M/s. Stumm India. We find that in the remand report the AO did not make any adverse remarks in the immediately preceding year i.e A.Y 2006-07. The AO allowed the claim of the assessee on similar facts. We find that the case laws as relied on by the CIT-A are relevant to the facts and circumstances of the case in deleting the impugned addition. Therefore, the order of the CIT-A on this issue is justified. Accordingly, we uphold the same. Therefore, the ground(s) raised by the revenue are dismissed.
In the result, the appeal of revenue is dismissed.
Order pronounced in the open court on 13-09-2017